Smart Like Us

Disappointing. From Krugman, the word is that former Fed Chairman Paul Volcker is completely out of the loop. From The Wall Street Journal:

The one-time central banker has been put in charge of a presidential advisory board that hasn’t yet had a formal meeting. It has been nearly a month since he has seen Mr. Obama. Mr. Volcker hasn’t been a main player in key decisions handling the global financial crisis.

Former Federal Reserve Chairman Paul Volcker says he has no complaints about his new role. Treasury Secretary Timothy Geithner unveiled the administration’s plans for handling troubled financial institutions and the housing crisis without seeking input from Mr. Volcker, associates say. “Paul was surprised” at the failure to consult him, particularly on issues of financial rescue after his dominant role in resolving financial crises in the 1980s, says one person who has spoken to Mr. Volcker recently.

I remember being all giddy when I heard Volcker was on the Obama team (click through to see former Volcker speechwriter Larry Kudlow do a double-take). I’m impressed with him as a matter of the history books – the finance people I know who lived through the early 1980s hold him with a sense of awe they almost never give anyone. Especially coming after a Fed chairman who left many very disappointed, having the person who is arguably the best Chairman of the Fed of the 20th Century within earshot sounds like a pretty fantastic idea.

So why not? Just for kicks, let’s look back at 2002, when the IMF was having a hissy fit with Stiglitz and his criticisms:

Joe [Stiglitz], you may not remember this, but in the late 1980s, I once enjoyed the privilege of being in the office next to yours for a semester. We young economists all looked up to you in awe. One of my favorite stories from that era is a lunch with you and our former colleague, Carl Shapiro, at which the two of you started discussing whether Paul Volcker merited your vote for a tenured appointment at Princeton. At one point, you turned to me and said, “Ken, you used to work for Volcker at the Fed. Tell me, is he really smart?” I responded something to the effect of “Well, he was arguably the greatest Federal Reserve Chairman of the twentieth century” To which you replied, “But is he smart like us?” I wasn’t sure how to take it, since you were looking across at Carl, not me, when you said it.

I wonder if there is a lot of “but is he smart like us?” going on with who gets access to Obama through Summers. That thought is quite disturbing – that perhaps the best financial mind of the 20th century is getting sidelined for not having enough of a repec rating.

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